Gannett offers to buy Chicago Tribune parent in $815 million deal

Tribune Publishing, which owns the Chicago Tribune and eight other U.S. dailies, said today it's willing to consider an $815 million acquisition offer from newspaper behemoth Gannett, but it appears to have deflected initial interest.

Chicago-based Tribune said it hired advisers to help the company review the April 12 proposal from Gannett and noted that it told Gannett in an April 22 letter that it was finalizing those arrangements.

Still, in the offer it made public today, Gannett included a letter to Tribune Publishing dated today saying it was “disappointed” by Tribune Publishing's “continued refusal to begin constructive discussions.”

In that letter, Gannett CEO Robert Dickey said he wanted to remind Tribune Publishing management that Gannett's $12.25-per-share offer would give Tribune Publishing shareholders a 63 percent premium over April 22's closing stock price. Tribune Publishing's stock has dropped by more than half over the past year to $7.52 as of April 22.

Tribune Publishing surged in early trading, up 4.33 (57.58 percent) to 11.83.

Tribune Publishing seemed to suggest in its statement that its management thinks it may not need Gannett, which owns USA Today and a host of other newspapers in 120 markets internationally, to face the challenges of today's newspaper operating environment, namely declining print ad and circulation revenue. Tribune said it is “focused on executing a content-first strategy.”

Nonetheless, since taking control of the company in February when his Merrick Media group purchased a 16.5 percent stake for $44 million, Tribune Publishing Chairman Michael Ferro hasn't laid out a detailed plan for the company.

While he and his newly appointed CEO, Justin Dearborn, appeared to be following former CEO Jack Griffin's strategy to expand through acquisitions, the U.S. Justice Department put a stop to the company's effort to buy the parent of the Orange County Register in California.

An acquisition of Tribune Publishing would amount to a departure from Gannett's recent strategy of adding mainly midsized and small newspapers in its national chain. Earlier this month, the newspaper giant closed on a deal announced last year to pay $280 million for Milwaukee-based Journal Media Group, owner of the Milwaukee Journal Sentinel.

Given the industry's challenges, Dickey said in his letter that Gannett and Tribune would be stronger together. “By combining, we would create a company with the financial stability and flexibility equipped to preserve journalistic integrity, high standards and excellence for years to come,” the letter said.

For the owners of daily newspapers, acquiring competitors and slashing costs has become a way to buy time while figuring out how to make more money online.

Last year, the industry saw the most deals for the largest amount of money since the 2008 financial crisis, with 70 daily newspapers being sold for a combined $827 million, according to mergers-and-acquisitions adviser Dirks Van Essen & Murray. Gannett bought 15 dailies, including the Milwaukee Journal Sentinel; Tribune snapped up the San Diego Union-Tribune; and Warren Buffett's newspaper chain acquired the Free Lance–Star in Fredericksburg, Virginia.